Three Economic Signals From the Pickle Index

Recently, the pickle index, a new way of tracking migrant workers through the sales of pickled vegetables, or zhacai, a popular and affordable food among China's floating population, has aroused plenty of attention. The index reveals something fascinating about China's migrant workers. More and more migrant workers, who largely originate from China's central and western regions and head toward the coastal areas for job opportunities, mostly for factory jobs, are now returning home in larger numbers.

The reason is that wages are growing at a slower pace along the coast compared with more inland regions, and job benefits aren't so desirable.

The market share of Fuling zhacai, produced in the city of Chongqing, fell from 49 percent in 2007 to 29.99 percent in 2011, implying that few migrant workers are on the go.

Now that fewer migrants are leaving for the coast, China's inland areas need to make improvements in public services and social security. According to media reports, officials from the National Development and Reform Commission invented the index, which enables them to discern population inflow and outflow areas in hopes of formulating policies accordingly.

For years, the energy-intensive and low value-added manufacturing industry has absorbed numerous workers along the coast. Now, China is going through economic restructuring and industrial upgrading. An array of factors, such as rising labor costs, declining overseas demand and the return of manufacturing to developed countries, have made its original development mode unsustainable.

The backflow of migrant workers will push the new urbanization of central and western regions. Workers are the most important factor in production. The question is how to retain these rural migrant workers in their hometowns before they possibly leave again. In this sense, local governments in central and western regions should strengthen efforts in promoting their respective social security and healthcare systems, and education for their children.

It has been suggested that the likes of the pickle index and beer index, aside from traditional economic indicators, can help common people become informed of

economic changes in a clearer, more vivid way. The emergence of the pickle index indicates that traditional economic indexes should advance with the times, and get rid of false reports and modifications, a common trait among local politicians who routinely inflate economic figures in order to receive promotions.

This is an edited excerpt of an article by Fu Jianli, a financial commentator, published in Securities Times